Money News

'Positive sterling response' follows coalition government

Thu 13th May 2010

The confirmation that Britain is being led by a coalition government of the Conservatives and the Liberal Democrats has seen a rise in the value of sterling, but Caxton FX has claimed that the situation is still on a knife edge.

Duncan Higgins, senior analyst at the currency exchange specialists, suggested that sterling could reach €1.20 by June as long as there are no "nasty surprises" before then.

He stated: "The view now is that a coalition between the Conservatives and Lib Dems should still have the strength to enforce the necessary measures to bring Britain's finances back under control."

However, Mr Higgins stressed that while the markets have been calmed for now, they will not remain that way if problems appear within the relationships between the two leading parties.

The finance expert noted that forming a stable coalition is very tricky and concessions must be made on both sides.

It has been reported that the first cabinet meeting was due to start at 09:00 BST this morning.